Page 32 - MA12

Cash Flow Statement—Based on Accounting Standard-3 (Revised) 3.7
Solution: CASH FLOW FROM FINANCING ACTIVITIES

Particulars `
Proceeds from Issue of Equity Shares 10,00,000
Proceeds from Issue of 10% Debentures 10,00,000
Receipt of Securities Premium on Issue of 10% Debentures 1,00,000
Expenses on Issue of Equity Shares and 10% Debentures (1,00,000)
Cash Flow from Financing Activities 20,00,000
Note: Expenses on Issue of Equity Shares and 10% Debentures are written off from Securities Premium Reserve.
Illustration 5.
From the following extract taken from the Balance Sheet of Khanduja Ltd. as at 31st March
and the information provided, you are required to calculate:
(i) Cash Flow from Operating Activities; (ii) Cash Flow from Financing Activities.

Particulars 31st March, 31st March,
2018 (`) 2019 (`)
Equity Share Capital 20,00,000 30,00,000
10% Preference Share Capital 2,00,000 1,00,000
Securities Premium Reserve ... 1,00,000
Surplus, i.e., Balance in Statement of Profit and Loss 4,00,000 8,00,000
10% Debentures 10,00,000 10,00,000
Public Deposits ... 1,00,000
Information:
1. Preference Shares are redeemed at par on 1st April, 2018.
2. Final dividend on Preference Shares and an interim dividend on Equity Shares @ 8%
was paid on 31st October, 2018.
3. Fresh Equity Shares were issued on 1st April, 2018.
4. Public Deposits were accepted on 31st March, 2019.

Solution:
(i) CASH FLOW FROM OPERATING ACTIVITIES

Particulars `
Net Profit before Tax (Note) 7,60,000
Cash Flow from Operating Activities 7,60,000

(ii) CASH FLOW FROM FINANCING ACTIVITIES
Particulars `
Proceeds from Issue of Equity Shares 10,00,000
Receipt of Securities Premium 1,00,000
Receipt of Public Deposits 1,00,000
Payment for Redemption of Preference Shares (1,00,000)
Dividend paid on Preference Shares (20,000)
Interim Dividend paid on Equity Shares (2,40,000)
Interest paid on Debentures (1,00,000)
Cash Flow from Financing Activities 7,40,000